Chapter 5 - Legal & Regulatory Flashcards
What is the reason for compulsory insurance?
What is the common link?
Pay for compensation
In response to national concerns
They are all liability insurances
How can compulsory insurance be subdivided?
Name examples for both
Private and professions / businesses
Private - 3rd party motor, public liability for dangerous animals
Professions - Motor insurance and employee liability
What is the minimum and recommended level of indemnity for employer liability?
5M, 10M
Where is public liability insurance compulsory?
Riding schools (public + riding persons)
How is dangerous animals liability usually purchased?
As an add on for home insurance
Which professions require professional indemnity insurance?
Brokers, solicitors
Who generally defends the claims made against the insured for compulsory insurance?
The insurance firm
Why does compulsory insurance continue even after business has ceased operations?
Liability claims are long tail, protects the consumer
What is a warranty?
A promise made to the insurer by the insured
How are warranties and duties of good faith breaches treated in liability contracts? - Enforced by which act?
Third parties must be compensated. Insurers then subrogate from insured.
Employer Liability Regs 1998
Summarise the consumer rights act 2015
T&Cs in consumer contracts must be fair, transparent
Unfair practice is where the T&Cs cause significant imbalance to the detriment of the consumer
Summarise contracts act 1999, how is it handled practically
Only named parties (privy) can enforce a contract / sue for a breach
Third parties can only enforce is contract expressly provisions it or third party is named
Practically, as long as insurers can see chain of ownership especially in marine. it is paid
What are the rates for insurance premium tax ? Who is responsible for paying this to HMRC?
12 - standard
20 - higher
The insurer / broker collects from insured. Paid on quarterly basis, part of Xchanging
How is IPT and Brokerage calculated?
On Gross premium, prior to any brokerage or tax deductions.
GWP = 1000
Brokerage = 20% therefore £200
IPT = 12% therefore £120
Net Premium = 1000 - 200 -120 = 680
What are the requirements and aims of the SM&CR, what are the three parts?
Requirements:
- Statement of responsibilities
- Map of responsibilities - how they all stick together
- Pre-approval by regulators
Aims:
- Assign responsibility to staff, making sure they understand
- Improve conduct at all levels
Parts:
- Senior Manager’s regime
- Certification regime
- Rules of conduct
